For UK homeowners, news of rising energy prices is nothing new. Prices for gas and electricity have been rising for years now, mainly due to diminishing North Sea gas reserves and increased prices for imported power. However, the bad news may be getting even worse, as prices could be set to rise further due to an unexpected factor: railway electrification. The UK is currently in the process of upgrading its rail lines from diesel to electric, and this process could end up driving up energy tariffs. While most consumers probably don’t see the connection between electricity prices and railway upgrades, energy firms are already warning that consumers could be collectively hit with a consolidated price increase of hundreds of millions of pounds. This article will look at the railway electrification process, what it has to do with energy, and whether consumers are likely to be paying more because of it.
Diesel to Electric Railways
The government has announced a plan to convert its trains from diesel to electric. Electric trains are more environmentally friendly, allow for greater passenger capacity, and are faster and quieter than diesel trains. This process, however, will require the rerouting of numerous cables. Responsibility for the rerouting will largely rest with Network Rail; however, it is yet to be worked out who will bear the burden of all these costs. So far, it is expected that the upgrades will largely be funded by taxpayers, but a fight is brewing between Network Rail and energy network companies over who will bear the extra costs for the upgrades.
Railways and Energy
Energy companies play a big role in the UK’s railway infrastructure. The fight between them and National Rail has less to do with the transportation than it does with the cables that run alongside Britain’s railways. The cables are owned by the energy network companies, but in order for Network Rail to proceed with electrification, those cables will all have to be rerouted, which is expected to cost hundreds of millions of pounds. While the cost for electrification itself will be the responsibility of taxpayers, there is little agreement over who should fund the cost of rerouting cables. In the past, rerouting costs were the responsibility of the energy companies, but according to those companies, past rerouting projects were regional and rarely exceeded tens of thousands of pounds. Those previous costs were then passed on to the consumer, who noticed little difference in his utility bill as the projects were so limited in scope. The current electrification process, however, will require rerouting cables on a national and unprecedented scale.
According to the energy companies, if they are forced to pay for the rerouting of those cables, then customers will be hit by unfair price increases through their bills. While the companies concede that in the past they were willing to pay for rerouting, they argue that the scale of the current rerouting process should mean National Rail should be held financially responsible. Furthermore, they say that the costs for such rerouting will not be distributed evenly across the UK, but that rather some regions may be subjected to even higher increases than others in order to fund the rerouting. The companies are currently submitting their business plans to Ofgem, and are seeking Ofgem’s approval to pass on the cost of rerouting to consumers should those companies be held responsible for the rerouting process. At the same time, both the energy network companies and National Rail continue to negotiate over financial responsibility for the rerouting of cables. Meanwhile, customers will simply have to wait to see whatever an agreement is reached between the two parties, and whether that agreement will end up affecting the cost of energy.
UK homeowners have been informed of energy tariff rises due to dwindling energy supplies and the increasing cost of importing energy from abroad. Unfortunately, however, as the government pushes through with its decision to electrify Britain’s rail network, consumers could be faced with yet another increase to their energy bills. While the fight between National Rail and the energy network companies is far from resolved, the outcome of the disagreement could have a big impact on the cost of energy for millions of UK homeowners.